Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: Give us two minutes. We are live. We are live. And this is Senate Finance. This is March 31, and we are going to do our first walk through. We did a couple last Friday. We're trying to walk through all our house bills. To date, this is probably the biggest one we've gotten. The yield bill, which also has a lot of tax stuff on it, education tax. Went to education, they're gonna go through their sections as quickly as possible and get it over to us. We'll start. Those are probably the two largest bills and probably the most complicated ones we're gonna deal with. So my goal is to clear out as many of these simple little bills that have fees on them only so that we can really sit down and have more time than we had last year to work on Ed financing. So we're gonna start with Jen. And, Jen, you wanna walk us through it? Okay. Good afternoon. Janet Frederick with the office of legislative department. I've got the poll up on the screen here. We are looking at H585, an act relating to health insurance reforms.

[Janet Frederick (Legislative Counsel)]: It starts out with sections dealing with health insurer governments and executive compensation, and we're looking specifically at non private hospital service corporations, which is a type of insurance company. In this case, we're really talking in Vermont about Blue Cross Blue Shield of Vermont. So that is who we have in the state for a nonprofit hospital service corporation. Known as an insurance company. Well, we have other insurance companies. We've got Cigna, which is not approved, we've got MVP, which is service. So this is specifically the framework under which Blue Cross Blue Shield, I think, a nonprofit medical service and nonprofit hospital corporation. This is the chapter on non profit hospital service, but they are not a hospital. No, it's a hospital service. Service. Okay. So there is an existing chapter in Title VIII, Chapter 123 on nonprofit hospital service corporations. It has certain powers and description, and under existing law, it must be maintained and operated solely for the benefit of its subscribers. This would update some language and add, and shall ensure that benefits and services are balanced with the efficient and economical management of the corporation. And you'll see that ties in with some additional language in here. In existing law, there's language around the permit to engage in business and some of what the board of directors has to involve. This language isn't being repealed like it's coming out of the law, it's just being repealed from this place and added into a new section 4513A on the board of directors. And so if it starts out with definitions, provider is anyone who's a provider of hospital or medical services, or who's an employee, director, trustee, or representative of such a provider. Representative of the public, which is a new term being added here in this bill, is any member of the board of directors appointed by the governor, and you'll see some more language on this coming up, and a representative of the public may be a member of the public, subscriber, or a provider. So then this is the rest of the language that was moved from that existing section of law saying that at least three fourths of the board must be composed of subscribers and members of the public, and the remainder may be providers. The subscriber members have to comprise at least a majority of the board, and the corporation must provide for the election of its board at a publicly announced meeting. Okay, so. Some of this is just rare Yeah, but presently, does the governor No, so this is where we're getting into the representatives of the public. Right. The Subscriber is just somebody who is a member of the plan, who's insured to Okay, so any member of the public that has Blue Cross insurance. Would be a subscriber. It is also just members of the public, which is Reforces before. Yes, so that's moved from current law, but the same as current law. At least three fourths of the board, really? Yes, at least three fourths of the board of directors of the corporation instruct their language as subscribers and members of the public. Yes, all of this language is repeated in 4513A. Okay. But the new piece is the representatives of the public. And so that provision requires that two voting members of the board, but in no event less than one sixth of the board of directors, must be representatives of the public appointed by the governor. Unless otherwise specified, a representative of the public has the same rights and responsibilities as anyone else on the board. How many people on the board? I believe there's 12. Yes, 12. Yes, and you're gonna hear from DFR when they get Okay. Two fifteen, so they can tell you a lot of the why this language. Most of this language, most or all in this section came from DFR. Okay. It's not the government's all these. Well, DFR is for the government. So, will let them tell you whose specific idea. Alright. So, the initial term, we're having staggered terms to begin with, so the initial term of one representative of the public is two years and the other is three years. If there are more than two representatives of the public, then their initial terms would be divided between those two initial term lengths, and then after that, each representative of the public appointed by the governor would serve a three year term and serve until a successor is appointed. Representative of the public can be terminated only by the appointing authority, which is the governor, by conclusion of the appointed term, or by voluntarily resigning. If there's a vacancy before the end of the three year term, for any of those reasons, the governor will appoint a new representative of the public to complete the term. Then there's committees, requires the board, or allows the board of directors to create, but one is gonna be required, one or more committees, and appoint members of the board, including representatives of the public, to serve on committees. It directs that the board shall create a compensation committee to review and recommend to the full board for approval all compensation packages offered to the corporation's officers and executives. And then perhaps a little bit about compensation committee, would have two or more members who serve at the pleasure of the board, but at least two representatives of the public must be voting members of the compensation committee. There's some guiding principles for the representatives of the public in discharging the duties of a director, as part of a committee. Each representative of the public shall, in determining what they reasonably believe to be in the best interest of the Hospital Service Corporation, consider the effects of any action or inaction on the subscribers, the community, and societal concerns of the state of Vermont, including the principles for healthcare reform, expressed in HMBSA section nine thousand three seventy one, sometimes called the Act 48 principles, and the goal that the corporation's benefits and services should be provided at minimum cost and under efficient and economical management of the corporation. They may consider any other relevant factors in the interest of any other group that the representative of the public determines appropriate to consider, and they shall not be required to give priority to the interest of any person, particular person or group described in subdivision one or two over the interest of anyone else. And then it specifies that the consideration of the interests and factors in the manner described in that subsection is not shall not constitute a violation of the nonprofit corporation statutes. That's what's in title 11 b. There's limitations on representative of the public's liability. They're not liable for the failure of the corporation to create general or specific impacts on the community or on the healthcare system. They're not liable to the corporation for any action or failure to take action in their representative's official capacity if they perform the duties of the office in compliance with the nonprofit corporation statutes and this section, and in the event of a conflict that this chapter would control. Is anybody else liable on the board? Yes and no, I think. I I think it would depend on the issue. I was wondering why we give immunity to some and not all. Yes. Which means if you're immune from consequences that might impact your decision. Right, they're reviewed for certain, from liability for certain outcomes. So, and I would defer to DFR to talk about general liability for members of corporation boards under their purview. And then there's, the representative of the public has no duty to any person who is a beneficiary of the general or specific public benefit purposes of a hospital service corporation arising solely from that person's status as a beneficiary of the general or specific public benefit. And it requires that any new hospital benefit corporation adopt bylaws in accordance with, these provisions and chapter 11 b and file with the commissioner of DFR for review and approval. And you'll see in the next full section of the bill, section two of the bill directs existing hospital benefit corporations to amend their bylaws to come into compliance. The next section in this same chapter is on executive compensation. Starts out with definitions. Compensation is total cash compensation, including base salary and annual incentive compensation. And executives are the president, officer, chief medical officer, chief administrative officer, chief fiscal officer, vice presidents, and anyone in a functionally equivalent role in a hospital service corporation. The bill requires on or before July 1, and prior to approving any changes to executive compensation after that date, each Hospital Service Corporation file with the Commissioner of DFR a statement sworn by the chair of the Board of Directors and the President of the Corporation that includes the following information about compensation paid to the Corporation's executives. First, all compensation benchmarks used in connection with establishing low boarding compensation for the executives, including information used by a consultant vendor or other third party, a detailed compensation survey or peer group data used by the corporation or any third party retained by the corporation to establish the compensation benchmarks or otherwise establish or award compensation for each of the executives. And if there was any bonus or variable compensation paid or awarded for the prior fiscal year, what criteria were used to evaluate whether that compensation should be paid, and the specific results supporting the payment. All of the information provided must be sufficiently detailed to allow for a comprehensive examination of the benchmarks, and to allow DFR to perform independent computations to evaluate the benchmarks provided. It allows the commissioner to require the corporation to modify a group, so one of these peer groups of data, if in the commissioner discretion the group contains entities that are not sufficiently similar to the corporation in terms of size, business operations, non profit status, or other factors. It allows CFR to retain at the corporation's expense outside consultants and other experts that are reasonably necessary to assist the commissioner in evaluating the materials provided, and it goes with the commissioner's control and direction, not giving me purely advisory capacity, and says nothing in this section, should be construed to preclude a corporation from segregating and designating anything provided to the commissioner as confidential because it is proprietary, privileged, or otherwise confidential under Vermont law, and the commissioner must maintain the confidentiality as appropriate under the Public Records Act. So that's the executive compensation piece. Have governance and executive compensation. Section two, as I mentioned, directs each existing hospital service corporation by September 1 to amend its bylaws to comply with the amendments to that chapter that were in section one, and file them with DFR for review and approval. Now we're changing topics, looking at expanding access to association health plans, and so this language in sections three and four would expand access to association health plans to reach capacity. So, if I have people that aren't witnesses, can I ask you to give your seats? I've got couple witnesses, and then you can filter back in.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: We're on YouTube, though, so you can Yeah.

[Janet Frederick (Legislative Counsel)]: You can mark it on YouTube. Would

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: that be better?

[Janet Frederick (Legislative Counsel)]: Alright. And you can watch this on YouTube twenty four seven.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: And Whatever speed you want to listen

[Janet Frederick (Legislative Counsel)]: to. All right, so this expands the potential scope of association health plans that could be offered in this state. You'll see a caveat coming up that for current federal law, this expanded scope is not permitted, but was under the first Trump administration and may be again in the future. So, it strikes a lot of the commonality of interest requirements and other provisions in existing Vermont law that had narrowed the scope of allowable association. Alright. I don't know if they come back. We may need to remove all those strikeout lines. So the strikeout does the expansion, and does the expansion starting in 2028, and then section five says, on or before next January, DFR must come back to committees of jurisdiction, including this committee, with certain information related to expanding access to association health plans beginning on 01/01/2028, which would be permitted under those changes in sections three and four. So, the BFR would come back and report to the status of federal law regarding association health plans, including the extent to which federal law would allow for the expanded access to the association health plans in Vermont beginning 01/01/2028. An analysis of the projected impacts on Vermont's health insurance markets of expanding, of that expanded access to association health plans, including likely effects on enrollment in and premiums for qualified health benefit plans in the individual and small group markets, using scenarios showing potential impacts over consecutive years if various percentages of healthier lives migrate from the individual and small group markets into the association health plans. And in consultation with the Green Mountain Care Board, the potential impact of the expanded access to association health plans on the board's health insurance rate review responsibilities. So, setting up a future expanded access and having a report back in the meantime, so you can understand the possibilities and the potential impacts. Now we change topics again, going into these reader assistance settings here. This is defining high dollar claims for claims edit purposes. This is a pretty narrow change. This relates to some language that was passed two years ago, I think, around claims edits and what kinds of edits insurers can make to claims, and there is language in that, for the most part, prohibiting prepayment, coding, validation, edit, review, but saying that it can be used under certain circumstances, including and under current law, says including evaluating high dollar claims. This would define high dollar claims, so including evaluating claims exceeding $25,000 per episode care. Now we've got some language on-site neutral billing, and really site neutral reimbursement is what we're looking at, and this would be on-site neutral reimbursement for physical therapy, occupational therapy, and athletic training. So it'd add a new provision in Title 18, requiring health plans to establish and pay for all physical therapy, occupational therapy, and athletic training items and services provided to insurers in reimbursement amounts that are uniform and consistent across all of the plans, contracts, and fee schedules, really all outpatients. So a plan may reimburse different amounts for items and services delivered in an inpatient setting. The outpatient fee schedule has its own kind of definition, so we're describing rather than using that term. And it requires health plans to express each reimbursement amount as a percentage of the Medicare rate for the same item or service. So with an eye toward reference based pricing and understanding what Medicare is. Medicare came from athletic training? Medicare. I think services, I think certain services provided by an athletic trainer, depending on the context. Okay, maybe if it comes under the context of physical therapy. Right, I think, yeah, I think the Medicare. It's talking about a percentage of the Medicare rate for the same item of service. We're looking at services provided, physical therapy services, occupational therapy services, and athletic training items or services. So, items or services that fall within the scope of those professions to the extent that they are reimbursed by the private health insurers would be A, the same reimbursement amount across all plans of that payer, and B, based on a percentage of the Medicare rate for the item or service. So, if there's not a Medicare rate, I suppose they may not be able to do that, but I think it's more about the services that may be provided by different types of providers. Good question. Chittenden, do you mind if I ask you? No. So my understanding of athletic trainers is that they usually work for a school or a university or some organization, and are they billed for what they're providing to an individual or? They are sometimes. We do have an insurance mandate in Title VIII requiring health insurance coverage for services provided by athletic trainers, so I'm not sure what the context would be, where insurance would be paying versus if it included in the school budget, but there may be witnesses who could speak to that more directly. Okay, thank you.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Does the doctor need to prescribe a certain amount of physical therapy or once it's approved, is it really up to the patient to say, I want to go once a week, twice a week? How much does this open the, who should determine it as to how much this is used?

[Janet Frederick (Legislative Counsel)]: I don't believe this provision changes anything about the duration of the service or the intensity of the service. It's paying for the same reimbursement amount across all plans, so there's not different rates for independent providers, hospital based providers, different parts of the stuff. And I know with physical therapists that has been an ongoing crisis. Right. This started out at just If physical you go to my local gym and get the same trained physical therapist at the rehabilitation gym as you get if you go down should be hospital rehab. And I'm not sure if that includes the $200 facility fee or the base rate, but we can check that. But it and it they hadn't had we got them a raise, I think, two or three years ago. They hadn't had a raise in ten years. So I I don't know about athletic trainers news. So my understanding, you'll wanna hear from the insurers, but my understanding is that the the suite of services provided by physical therapists, occupational therapists, and athletic trainers are largely the same sort of services. They may be provided in different settings by different, or for different purposes by different providers. Right. But that's why these are all, it started out with just physical therapy, and it became apparent that it won't be Occupational, physical meant to bring you back to full health. To me, athletic training. I think that is usually done to somebody that's in full health and trying- I think it's more the healthcare side of it. Okay, restoring Restoring I'm sure they're already We will answer them. Alright. There's some legacy underlying, shouldn't be in here. Section eight is site neutral reimbursement for these services and an implementation report. And this would require that by 03/01/2027, each insurer that is required to make these site neutral reimbursements would provide an update to the committees of jurisdiction, again including this committee, on its implementation of the site neutral reimbursements, any trends or other financial impacts it has identified so far as result of implementation, and any recommendations regarding enactment of additional site neutral reimbursement requirements. Section nine is on increasing flexibility in health insurance plan design, and this is looking at, for those of you who have been on this committee for a while, you may remember that there is an out of pocket maximum out of pocket limit for prescription drugs that is in Vermont law, that is not a federal requirement, but it's a Vermont statutory requirement now in EBSA 4,892 that limits the amount of out of pocket exposure a person with insurance has, and it's tied to the premium for the lowest cost plan that qualifies as a high deductible plan under federal law, really a weighted sort of kind of index that goes up on its own. But that has limited the ability to have some flexibility in insurance plan design, particularly in individual and small group markets where they have to hit certain actuarial values, certain amounts of out of pocket expenditures in order to reach the different metal levels, the bronze, silver, gold, and platinum metal levels. And having prescription drug, out of pocket maximum means that's fixed, means that there may be more medical out of pocket exposure, non prescription drug medical out of pocket exposure. So, with that background, Ruth directs the Department of Vermont Health Ipsos in consultation with DFR to consider the feasibility and potential impacts on premiums and plan design of allowing insurers to offer plans in the large group market and at each meta level and the individual and small group markets that do not include the out of pocket limits for prescription drugs that are set in statute. There is an overall out of pocket maximum under federal law that would not change. Provided the insurer also offers plans in the same markets that do include the out of pocket limits for prescription drugs. And by 01/15/2027, DIVA would provide its findings and recommendations to the committee's jurisdiction, again, including this committee. So again, this is looking at what would happen if there were plans offered both with and without the out of pocket prescription drug maximum that is in existing law. Now we have a new section on annual reporting on healthcare sharing plans and arrangements. This would add a new chapter in title eight in the insurance title, although not health insurance, because it's not, on healthcare sharing plans and arrangements. And this would say that a person who is not authorized by the commissioner under the various chapters establishing health insurance companies to offer insurance in this state. So a person not authorized by DFR to offer insurance in this state that offers or intends to offer a plan or arrangement to facilitate payment or reimbursement of healthcare costs for services for Vermont residents, regardless of whether the person is domiciled in this state or another state, must submit to the Commissioner of DFR on or before October 1 this year, and on or after March 1 each year thereafter, certain information. Information on the total number of individuals and households that participated in the plan arrangement in Vermont in the previous year, the total number of employer groups that participated in the plan or arrangement in the state in the immediately preceding calendar year, specifying the total number of participating individuals in each employer group. If the person offers a plan or arrangement in other states, the total number of participants they have nationally, any contracts the person is entered into with providers in this state to provide healthcare services to plan or arrangement participants, the total amount of fees, dues, or other payments collected by the person in the previous calendar year from individuals, different groups, or other participants specifying the percentage retained by the person for administrative expenses. The total dollar amount of requests for reimbursement of healthcare costs or services submitted in this state in the previous year by participants or providers who provided services to participants. The total dollar amount of requests for reimbursement that were submitted and determined to qualify for reimbursement during the previous calendar year. The total dollar amount of payments made to providers in this state in the previous year for services provided to or received by plan participants. Total dollar amount of reimbursements made to plan or arrangement participants in the state in a needed 8% calendar year for services that they received. The total number of requests for reimbursement for services that were denied, expressed as a percentage of total reimbursement requests submitted in the year, and the total number of reimbursement request denials that were appealed. The total dollar amount of healthcare expenses submitted in Vermont by participants or providers in the previous year that qualify for reimbursement under the plan, but as of the end of the calendar year, have not been reimbursed, excluding any amounts that must be paid by a dispense incurring the cost before receiving reimbursement, so sort

[Joe Valenti (Director of Policy, DFR)]: of a

[Janet Frederick (Legislative Counsel)]: deductible model. The estimated number of plan or arrangement participants, the person anticipates in the state in the next calendar year, specifying numbers of individuals, households, employer groups, and employees. A list of other states where they offer a plan or arrangement. A list of any third parties other than a licensed insurance producer that are associated with or assist the person to offer or enroll participants in the state. Copies of any training materials provided to the third party, and a detailed accounting of any commissions or fees paid to a third party in the immediate preceding calendar year. For marketing, promoting, or enrolling participants and a plan, or operating, managing, or administering the plan. The total number of licensed insurance producers associated with or assisting the person and offering or enrolling participants, total number of participants enrolled through a producer, licensed insurance producer, copies of training materials, and detailed accounting and commissions for fees. Copies of any consumer facing and marketing materials used in the state promoting the plan, including plan descriptions, benefit descriptions, and other materials explaining the plan. The name, mailing address, email address, and telephone number of someone serving as a contact for the person in the state. A list of any parent companies, subsidiaries, and other names persons operated under within the previous five calendar years, an organizational chart and list of officers and directors, and a certification by an officer of the person that to best of their good faith, knowledge, and belief, the information is accurate and satisfies the requirements of this section. If a person subject to those requirements fails to submit the required information that the submission is incomplete, requires the Commissioner or DFR to make a determination of completeness within forty five days after the submission is received. If the Commissioner has not informed the person of any deficiencies within forty five days, submission is considered complete. It gives the commissioner some steps to take if the commissioner determines a person has failed to comply with the requirements of subsection A. They must notify the person that the submission is incomplete and ignorate each deficiency found in the submission, and allow thirty days after notice of the incomplete submission to remedy the deficiency. If the person does not remedy the deficiency within thirty day period, the commissioner may impose an administrative penalty not to exceed $5,000 per day. If the person does not remedy the deficiencies within thirty days after the initial administrative penalty is imposed, the commissioner may issue a cease and desist order. And then by 04/01/2027, and on or before each October 1 thereafter, the commissioner would prepare a written report summarizing the information submitted by persons under subsection a, and host the report on its website, along with accurate and evidence based information about persons that submitted information, including how consumers may file complaints, and allows DFR to adopt rules as necessary to implement this section review. Finally, have effective dates. The Act would take effect on 07/01/2026, except the expansion of the association health plans would take effect on 01/01/2028. And section seven, the site control of reimbursements for physical therapy, occupational therapy, and athletic training would take effect on 10/01/2026, and apply to provider contracts, undergated to amended, renewed, or otherwise taking effect or after that date. That's the whole thing. Deep breath. That's at least three bills. Walked through her walk at a time. We did well, it was less extensive. That last section was in a bill maybe three years ago, and we decided not to Certainly thought about healthcare sharing plans and arrangements in the past, but it was just, yes, specifically about reporting to DFR. It's entirely possible. I don't Yeah. No. We it was decided not to go for it with that. But okay. Alright. Questions for Jen at this time. I think it may take a while to all settle in. Yes.

[Sen. Ann Cummings (Chair)]: Nolan, can you're gonna give us a fiscal note? Yep. Okay.

[Nolan Langweil (Joint Fiscal Office)]: For the record, Milton Iguod, the Joint Fiscal Office. Two things I've really flagged here are the analyses. There's no appropriation for them, but they're worth flagging. I'm going do them in reverse. I'm going to talk about Section nine first, and then talk about the DFR. Section nine will require DIVA in consultation with DFR to consider feasibility and potential impact on premiums and on plan design of allowing health insurers to offer health insurance plans in the larger group market and at each meta level in the individual small group markets that do not include out of pocket limits for prescription drugs. So According to the agency human services, if we did a basic, quote unquote, no bells and whistles approach, the analysis could be done within their current actuarial plan design contracts. GIVA already has contracts with actuaries when they do the plan designs each year for Vermont Health Connect. So adding this little extra in there is really no extra cost, if it's basic dental services. So there wouldn't need to be an appropriation for this. For them to do that work, because it's actuarial work, actuarial work. Section five, however, required DFR to do an analysis of the impact of the wellness health insurance markets, of expanding access to association health plans, etcetera, etcetera. This one is a little bit different, I'll let Kai talk a little bit more about it. But the way, they don't have an actual contract specific to this, the way that they're mostly funded is through bill back. And so the way that it works is, you know, they regulate an entity. When they bill them, they regulate that entity. Well, there's no one to bill, We're doing a study. So they can't bill back to us. So we would have to give them an appropriation. And there's no appropriation of the bill. If I'm wrong, Kai will correct me on that. An actuarial study could run anywhere from 15 to $50,000 depending on the level. So it's one of those things where if you want to move forward with this, and you want to get part of that work, and this is not your purview, but I think there needs to be some acknowledgement and an appropriation of some sort. I'll let Kai talk more detail about what they would or wouldn't need, but this is really more of a flag of like, the bill moves forward, and you really want this work done. There needs to be able to talk about it. So again, I'll let Kai elaborate. You may say, No, I'm wrong. We could do it with our budget. We're glad to do it. I don't know. This would

[Sen. Ann Cummings (Chair)]: do a study of taking out any out of pocket payments for pharmaceuticals on the exchange, which I assume would add cost to. Yes. So it's another grade of sand on that. It be cheaper Yeah, than it would allow for more flexibility in plan design. So there might be plans, I don't know that it would per se. Oh, okay, so there would be a plan in which there's no out of pocket. So there is a federal maximum out of pocket that applies to all clinics. And then under Vermont law, because we have a prescription drug out of pocket maximum, The rest of that space can be, depending on the plan design, up to that full amount, can be the medical out of pocket maximum. So this would allow the insurers to design plans that maybe had a high, some plans that had a higher prescription drug, maximum out of pocket, lower medical expense out of pocket, that is different from what is available now. There's thought that some policy holders might prefer a different design. The way, I don't know if They have a lot of drugs Right, somebody has high cost drugs. Right, and there's concern about also getting rid of that maximum for people who is a significant benefit. And this would

[Nolan Langweil (Joint Fiscal Office)]: be trying to understand that impact.

[Sen. Ann Cummings (Chair)]: Exactly, trying to understand that.

[Nolan Langweil (Joint Fiscal Office)]: Okay,

[Sen. Ann Cummings (Chair)]: be a good thing to do. Questions.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Informed

[Sen. Ann Cummings (Chair)]: systems. How much of a good thing would we get the bill? Alright. Okay. Other questions for Noah. That's all? Easy peasy. All of this?

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Well, because

[Sen. Ann Cummings (Chair)]: I don't know why we've got infection.

[Nolan Langweil (Joint Fiscal Office)]: You get a good insurance, and there's a penalty.

[Sen. Ann Cummings (Chair)]: Okay. We're gonna move on. We're actually. And it's married you would marry a tag team? Are you separate?

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: We're gonna go sequential today. Sequential? Okay. So I'm gonna cover sections one and two, the government's Oh, okay. Health insurer governance compensation and pass it off to Mary, and then I think from Mary, we'll be passing it off to Joe. Quick note on the the fiscal note regarding the study of the in May, I guess it's section five around the sensitivity to the risk pool, the impact on the risk pool, the small group and and individual risk pool of AHP expansion that we yes. We do primarily build back our actuarial contracts. I believe the scope of how that's written in the study that we can absorb that through existing contracts that aren't reimbursed. So we do have exist similar to what you heard on on people, we have existing comes down and absorbed and worked with the to scope out the language of that study to be, I think you spoke beyond just, issues of how it would increase association health plans options impact, the small group. Primarily what you see in that language, what we're gonna look at is, you know, in any group we use the term morbidity or the health of that in English. It impacts everyone in that. What it's very difficult to estimate behaviorally without knowing everything from the profile of every single small group in state that's in the or in the level funded plan or using paper on where they put their individuals into the individual market or just don't offer at all. So without knowing that, which is, I don't wanna say impossible, but practically impossible to figure that out, and then what what price sensitivity would they move, etcetera. What I discussed with the chair over at the past, health care was what we can do fairly simply, and there's there's more than that in the study, but the primary goal as I see it is, let's understand if the top one, three, 10% healthiest, the healthiest top one, three, 5% should do some some numbers of each of those pools leaves, all of the pinks babies, or what's the impact on the morbidity of the pool remaining, what's the price impact of that? That's just great information for all of us to know. So I think and I think that analysis can be fairly straightforward. Problematic

[Sen. Ann Cummings (Chair)]: for our budget. So much

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: more nuanced answer, but that's that's where we stand there. So I I don't see myself in a position asking for budget for that. So then jumping into section one and two of five eight five, this was language that came out of DFR and originally and it looks at nonprofit hospital medical service provider providers of which that's chapter one twenty three and one twenty five of our statute or perhaps just one of the two. Made the same correction. Oh, and do we have Russ McDonald online? He is. Okay. Thank you. So Russ is an attorney in in in department. He can help with any of

[Sen. Ann Cummings (Chair)]: the legal Okay. Questions on the witness list. He's in the meeting. On Zoom. And on Zoom. Okay. Because we have him scheduled after he's married. I gather he's

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: just

[Sen. Ann Cummings (Chair)]: there to Yeah.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: I think mostly just to work on on this one because there are maybe questions. But so at this point in time, we just have one company that would is is enabled by statute as a nonprofit medical service provider. Sorry. Was mixing up. Medical or hospital. They may be both. Russ can jump in. But the so this is this is aimed at those entities of which currently there's just one, which is Blue Cross Blue Shield of Vermont. It's I believe strongly in my years of regulating that governance and power at the top is one of the most important things for a well managed and run company. This proposal is not radical, in my opinion. There's a board of directors of 12 members at Blue Cross, Good Shield of Vermont. This proposal says that two of those 12, no but if they expand the size of board, at no time is it less than one sixth of the board shall be made up of governor appointees. Why do I feel that's necessary? I think this committee and and several other committees, if not, most of the legislature in the state of Vermont understands that we had some some issues, solvency issues, with this entity. We've had a lot of very strong, good management decisions made by this entity, know, as as governed by the board of directors, but there's also been questions about strategy and directions that may have contributed to some of their financial challenges. The board as it stands now is what I would call a self perpetuating board, not unlike many nonprofit boards, not unlike many mutual insurer boards. And I believe, pardon the police, that having if we could rewind the tape, having had some greater, state of Vermont wide public policy wide, influence, not control, influence on the board, could change, could could prevent the next issue, in terms of managing the political environment, in terms of managing the regulatory environment, but also, as you'll see explicitly written in proposal, laying out that these two appointed board members, unlike the other board members of the entity, have an expanded duty to fulfill the health care transformation requirements referenced in statute that the legislature has adopted, and to have that lens and also the lens of all all of, the state of Vermont. So really, in a small step, doing a a in direction of formalizing a citywide approach with, by far our our largest, health insurer in the state. And, currently, the board has a focus on subscriber and automated. So these two members appointed by the governor would have a charge, some of who that language is abroad from a b corp statute, which I'm sure many or all of you are familiar in terms of what their charge is, in terms of the influence they are to have on that board.

[Sen. Ann Cummings (Chair)]: I think it would be helpful pretty much for who can do it, but to see who appoints which board members. I will say I'm a little weary about we may all love our present governor, but we may not love the next governor as much. And I'm a little leery about putting political influence into what should be a soundly run financial work in our mission. So I want to look at the qualifications for everyone on that board to make sure that they have the background necessary to make the complex. If I felt comfortable with that, then I probably wouldn't mind doing political hacks at the worst. Right. But

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: So for instance

[Sen. Ann Cummings (Chair)]: wanna make sure that we that we are sure that there's enough people that understand running an insurance company and what is required and what the financial should look like as opposed to what somebody's constituents want them to look like.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Yeah. No. And and as their chief regulator, I agree with everything that you said.

[Sen. Ann Cummings (Chair)]: I think maybe find out how to write that.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Right. Maybe Russ could go through, the current, structure of how that company the parameters with which they

[Sen. Ann Cummings (Chair)]: populate We'll the that another time.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Okay, we'll do that another time. Very briefly, they have 12 board members currently. They have a nominating committee. They have a controlling, they are controlled affiliate of the Michigan Blue Cross Blue Shield, and that controlled affiliate does have oversight up over the board. But still in their bylaws, are seven locally nominated appointed members of the board and then five explicitly nominated or or placed there by the parent of Michigan. So there's there's still so there's a seven five split at this point, and this position would say two of those would be, these points. So replacing two, not adding two to the 14. Very technically, it it says you do amend your bylaws to comply with the statute. They can do that in any number of ways. They can. Expand the board. That's why it says two or no less than one sixth, so if they wanted to add two, they'd actually have to add three, I think, mathematically.

[Sen. Ann Cummings (Chair)]: Okay. Sandy Barbour.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Is there anything there about compensation levels for board members? Not in our I didn't see anything. No. And I I will that's thanks for bringing that up. The The important feature of this is that these two appointed scores members, and it's in there, explicitly following all the COVID conduct and rule that any board member has, So to, you know, to help protect against the concern that they are political hacks, as you put it, that are spouting off and this isn't confidential information, anti anti competitive stuff, whatever. This is a painful one. It is a painful one. Yes. Where is the compensation level currently? Oh, that would probably be in the bylaws. I don't know, I've been trying to look it up, I wasn't able to find anything. Oh, it's in the Mary Help Me, Act 153 reports, or the reports that either come to us, the Care Board compensation, it's also on the annual supplemental compensation exhibit, lists the top earners at the company, all our insurance companies, domestics, as well as board of director pay, but it's certainly not prescribed or directly governed by the EFR, any insurers, for compensation, but they are compensated positions, and this doesn't mean we change that for these two or for any board members. And then the remainder of the governing section, as I call it, gets into the compensation decisions. And not unlike most companies of this size, insurance or not, the board has a process and a committee to determine executive level compensation, and a very common practice is to hire an outside consultant to benchmark and at times provide recommendations for both base salary and bonuses and other forms of compensation. Those benchmarks, I think, can either drive the compensation decisions or give comfort to the board compensation trajectory that they have for the executive leaders. What was concerning to me, I've been on the job for about a year now, was that I was wired of that data of the consultant, and the consultant used, I'll use general terms here, another data source for benchmarking, and all they could produce was the actual benchmarks for the the folks that Blue Cross was looking for compensation advice on, but not the actual underlying data. So what was I was curious about was who who who which companies are in your market setting? Are we comparing these paid packages to nonprofit food coops in Vermont, are we comparing them to multinational reinsurers? Neither of those, I hope, are in the pool, but I needed to make sure, and that data wasn't readily available, and I will say there was a commitment by management to ensure that in future you know, compensation studies, etcetera, that they would have that available. I'd like to put it in statute that that's an expectation for this type of company that the regulator can can see the peer group that's being used. And furthermore, we can, as you'll see in the language, we can add to that peer group. We can add and it doesn't mean they have to do anything with that. It doesn't compel them to say, oh, you you put the food and go off in the peer group, so benchmark just changed. You have to react to that, but it does allow DFR to have some influence and oversight of peer group.

[Sen. Ann Cummings (Chair)]: So I got back to you.

[Sen. Ruth Hardy (Member)]: Thank you, madam chair. I appreciate that the peer group and compensation. I'm curious. Is it common to have the regulator say we wanna make sure that we have two seats on your board, essentially? Because I I know it's

[Sen. Ann Cummings (Chair)]: not directly you

[Sen. Ruth Hardy (Member)]: Right. Saying it, but your boss would be appointing. Right. So it's essentially, it's the regulator appointing two members of the board. Is that a common structure?

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: I would disagree that that essentially the regulator will be appointing two members because I explicitly said that it would be inappropriate for for me to do it right to

[Sen. Ann Cummings (Chair)]: the board. Uh-huh.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: So that would be inappropriate. In terms of governmental appointees to a board like this, that is uncommon. It's been attempted in other states. It may have, at one point, been the case in another state. Russ, chime in if you have any of that history. But what I'll also say is that there are only two, that I end up with, two single state nonprofit Blue Cross the entire country. Vermont is a very unique market, as I'm sure you all know, in terms of health insurance and consequences of successor failure of a nonprofit carrier, and what's the history of solvency challenges is also extremely uncommon. So I think it's a confluence of those factors that drives me to recommend this or that we've had

[Sen. Ann Cummings (Chair)]: proposed this.

[Sen. Ruth Hardy (Member)]: No. I mean, I agree with you that the sort of gravity of the situation. It calls for I'm just curious about it it sounds like it would be a unique structure to have. It goes to some point. Okay. And if the goal of it is to have sort of some internal oversight, is two members gonna be sufficient?

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: I believe it will help. You know? Okay.

[Joe Valenti (Director of Policy, DFR)]: I don't know. It's not a you know? It's

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: I think I think it's a it's a big deal, right, to add that type of intervention into a board. And

[Sen. Ruth Hardy (Member)]: And to direct them to change their bylaws too, I'll do that.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: We've got some regulatory authority over their bylaws already. Okay. I mean, the unique level of direct and then kind of pulpit, the more you have with our investigative insurers is is pretty big. Mhmm. And, you know, this this is not as big as saying we can just appoint without legislation or benefits, but in terms of bylaws and and other things, we have quite a bit of influence. There's certain things that are significant enough that

[Sen. Ann Cummings (Chair)]: Mhmm.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Definitely need the legislature to take action. You know, in terms of is it enough, to me, think it's an appropriate step to just influence and bring some outside perspective on the backboard, given how important and inseparable that company is from our healthcare policy and trajectory in the state, and the consequence that we got dangerously close to snoozing and as a payer. Mhmm.

[Sen. Ruth Hardy (Member)]: So the sorry if I may. The the changing the bylaws that you do in other contexts for other different types of

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Not changing them. I believe we can review and approve them. Russ, do you know offhand or married?

[Sen. Ann Cummings (Chair)]: We do review and approve. Yeah.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: In in other changes.

[Sen. Ruth Hardy (Member)]: Different types of insurance companies? All insurance. Okay. I'm most familiar strangely with the, captive insurance because they come in here every year and talk about it. So I I understand that sort of level of regulation, but I was just wondering for other insurance companies. Right. What is this in the norm or outside of the norm? So

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: And and it reminds me to touch on that. I I know there's a concern from the nonprofit community that this is a slippery slope that, you know, government is now at all nonprofits, and I thoroughly reject that idea. You know, this is a very focused, statutorily prescribed placement of board members in very unique situations we just talked about. Any other scope creep or slippery slope would require equally controversial legislative language. Right? I mean

[Sen. Ruth Hardy (Member)]: Yeah. I just wonder I wonder if we I mean, I know we're not too mark up, but just putting a pin in this, but wondering if we might wanna include language. I don't think it's in here yet. That sort of gets to that point of why this is a unique situation. Mhmm. And sort of helps allay the fears. Findings. May well, I mean, more intense language maybe because findings go away. I don't know. Something that might help people feel more comfortable. This is why we think this is the appropriate level of oversight, and also maybe creating some kind of barrier between you, the regulator, and the appoint like, you wouldn't have a

[Joe Valenti (Director of Policy, DFR)]: role in it and that.

[Sen. Ann Cummings (Chair)]: Yeah. Just thinking as Yeah.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: And along those lines, that discussion of Governor appointees legislative appoint, that was discussed quite a bit in House Healthcare. One model that I looked at and have no objection to is how we appoint the United Care Board members, which is very legislative driven to the governor and the governor selected. And, know, from our analysis, does not take a tremendous amount of editing of that statute to just include, cause the principles are the same. The references to healthcare reform and priorities are the same in my mind in terms of the type

[Sen. Ruth Hardy (Member)]: of person we want. Right, and it puts some qualifications

[Sen. Ann Cummings (Chair)]: on people too. This is Ultimately

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: having simplicity wanted it.

[Sen. Ann Cummings (Chair)]: Yeah, that's fair. And

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: I guess if there are no further questions, comments. So, sorry, these two board members, do they have would they have the same fiduciary responsibility as the the other heads? That's gotta be a Russ questions. Believe the answer is no because they have a separate meeting described in any section. Okay. And my second question is, do they do they have the same confidentiality agreements as the other 10 board members? Yes. They will have to comply with everything that an ordinary Board member does, which Apologies.

[Sen. Ann Cummings (Chair)]: No, go ahead.

[Russ McDonald (Counsel, DFR)]: I'm happy to jump in on the first question, if that's helpful. That these two board members have different fiduciary duties, and they are the duties that are spelled out in the markup section that I just had and scrolled away from. Okay. In section, it looks like e one. This is a so then determining what the representatives of the public reasonably believe to be in the best interest of the hospital service corporation, they can consider the effects of action or inaction on the items listed below. So subscribers, community and societ societal considerations of the state, including the act 48 principles, and the goal that the hospital service corporations benefits and services should be provided at minimum cost under efficient and economic management. You know, particularly in that list, number item b is, I think, different than what would typically be understood as the fiduciary duties of a of a director.

[Sen. Randy Brock (Member)]: So who would there you know, we're one of the ten year fiduciary responsibility is Blue Cross Blue Shield. If you're one of the other two, who who is your fiduciary responsibility to? Well,

[Russ McDonald (Counsel, DFR)]: I think it's still to Blue Cross Blue Shield of Vermont. It's just the duty itself is understood slightly differently.

[Sen. Randy Brock (Member)]: And you said that they have the same confidentiality agreement. So would that preclude them from communicating with the appointing authority, the governor, Or are they like moles?

[Joe Valenti (Director of Policy, DFR)]: No. Fair question. They

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: need to behave like any other board member. Okay. I mean, if any other, if, if the chair of the board wouldn't take action against a board member who without any knowledge or any discussion when the governor or the regulator to to share information, if that's a breach of current board hold news, then that's no bueno for for this point, Katie. Okay. Thank you.

[Sen. Ann Cummings (Chair)]: I love how

[Sen. Ruth Hardy (Member)]: chill you've asked that.

[Sen. Ann Cummings (Chair)]: Are they? We'll spend some time on this one. A chair likes charts, so I particularly can't get a chart as to who the board members are, who's who subscriber is, and then who's who represents subscribers, who's make sure we've got a balance and to make sure in there somewhere somebody has enough financial understanding and knowledge to know what's being talked about and to understand the impacts on their own without having to take the word of somebody else. Alright.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: So The next section, deputy Mary Galock is gonna

[Sen. Ann Cummings (Chair)]: cover. Okay.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Thank you for your time.

[Sen. Ann Cummings (Chair)]: Thank you. Sure. You'll hear from us again. We're just trying to keep you awake by going back to you. So, for the record, I am Mary Block.

[Mary Block (Deputy Commissioner of Insurance, DFR)]: I'm the deputation of insurance through the Department of Financial Violation, and I'm gonna talk about association health plans. So, this is section, starts in section three. So, with health plans are exactly what they, they are group insurance plans that consist of an association group of employers who are connected in some way, generally. The most common one, I have very few in Vermont right now, but we do have one big one in which I

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: didn't see.

[Mary Block (Deputy Commissioner of Insurance, DFR)]: The Vermont Auto Dealers Association has an association called Franklin. So it is all of the auto dealers in Vermont. They gather together so that they can get an insurance plan that covers all of those members. In doing that, it allows them to leverage their size. They are a large group plan, association health plan, because they have a lot of members, as opposed to a small employer on their own, working there from a small group market or try and go self insured and so forth. Before association plans went away under federal law, it was the Chamber of Commerce who was the biggest provider, and if not, almost all pretty close small businesses in Vermont joined the chamber of commerce Mhmm. And were thus able to form a large group and take advantage of that large group. And when associations went away They were all on their own. They were all on their own, and they were hurt. Yep. So the way the law currently stands, the federal law is limited at the moment. Trump won administration on association health plans. The Biden administration narrowed it back down again. Vermont's definitions are even narrower than the federal government's, and there are two pieces to this. There is a statute, which is what we're talking about, and then there is a regulation that goes with that statute. That regulation defines the benefits that those association health plans have to put into their plans. So this would be a two part process. We would change the statute so that it would trigger off of federal law so that if there is a change in the federal law that broadens it again, then we would automatically have broadened that ability, And then we would also have to change the regulation because right now, the way our regulation reads is we force association health plans to maintain the same standards as the individual market. So, they have to meet all of the exact same mandates and everything else as the individual small group market. Traditionally, health plans, because they are larger, are allowed to meet the standards of the large group market, which provides them more flexibility around benefit design. So, we would change the regulation so that when it broadened, they would also be able to be treated as a large group again and have that large group benefit flexibility. Those benefits and those plans still have to be, the rates still have to be approved by the Vermont Care Board. They still have to be filed or approved by us. Just, it would decrease the size of eligible employers who might be able to take advantage of this structure. So, when we originally proposed this, we proposed making change for 2047. The House Health Care Committee was a little uncomfortable with what the effect was gonna be on the markets, the small and the individual group market. So they asked us, they put the language in that would require us to do the modeling that commissioner Simpson talked about and and postpone the effective date until January 2028. So we will do that study, figure out to the best we can because it's hard to tell who's gonna choose to join the association and who's not, and do some modeling as to what the potential impacts are if we decide to do that expansion. We feel like it provides an option to employers that they don't have right now. It may adversely impact the small group market. So it's a balance. People are, and employers are desperate. Some are choosing not to provide health benefits at all at this point. This might give them the option to do so again if they had a palatable plan that they could get into. So, we feel like providing options is something that's just doing at this point. Probably so I've been through all of these evaluations. This is probably one of the most painful discussions the risk committee has because it's really who's going be paying. If we help out the small employers by letting them associate and join the large group market, they're going to benefit. But we take that lower morbidity group out of the individual market where just people who are not employed, whose employer doesn't offer insurance, and these are often people with some chronic illnesses, they get hurt. Yes. And with changes on the exchange, we know people across the board are hurting, at least in that small individual market. And if we take out healthier people, they're gonna hurt more or less we can find something else. It is concerning. We are hearing from the federal government. It's nothing official at this point. We did have a meeting with CMS, the Central Medicaid, recently, that an expansion is probably on the horizon. We also got a very clear message from them that they have no intention of really supporting the small group market. They they are pushing more towards the use of ICRAS, which and then the small and the individual market, which means employers contribute certain amounts and then employees go buy on the individual market. So they we're not probably gonna get help from the Feds. From the Feds, they are looking to shift the dynamic here. So, we will either be trying to hold firm the wall or attempt to go with the shift and make the best of it. Now we can go back to having seven, eight, 10% of our population uninsured, which leads to higher morbidity and higher costs because they do show up at the hospital. Yes. There is no abolition service. Okay. I remember this conversation in 2021. Mhmm. You did this the last time. Yes. And yeah. Well, we went through this with single payer at and the food's actually bottled on the system. Taiwan did really well during COVID. So yeah. Okay. Questions? Or should I pass it off to somebody else who's got cheerier things

[Nolan Langweil (Joint Fiscal Office)]: to talk

[Mary Block (Deputy Commissioner of Insurance, DFR)]: With anything cheerier today? But at least simpler.

[Sen. Ruth Hardy (Member)]: This is just putting into place if this shift in the federal government. This would make our statutes. Shift with it. Shift with it.

[Mary Block (Deputy Commissioner of Insurance, DFR)]: Yes. We would still have to take the second step of changing the regulation, and then once the shift happened at the federal level, the regulation would be changed and they would get the full benefit of an AHV. Just say everybody's in one market? That wouldn't work. No. Unfortunately, we we you know, We always struggle with the fact that in reality we only influence about 30% of the market, 20 Right? Percent of the So there's another 70 that's in the illicit market that's doing all Not kinds of things or covered, hearing aids, self insured, stop loss. Yeah, they can do whatever they want. It is a private agreement between you and your employers. And we don't have any support, and we don't have any support there. Okay. Alright. I'm gonna pass around to Joe for a couple of things. Well, at least it's not Friday. I'm going.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: My mother's date Friday.

[Sen. Ann Cummings (Chair)]: Oh, she was Monday. Yeah. It is we're just starting out. Alright.

[Joe Valenti (Director of Policy, DFR)]: Alright. Joe. For the record, Joe Valenti, director of policy at VFR. I am going to cover sections six through eight and then hand it back to Mary to close us out on the bill. I think these are both fairly straightforward. So section six, as Janet pointed out, is dealing with prepayment claims edits. So there was language in act one eleven in 2024 that restricted the use of prepayment claims edits and provided some exceptions to that. One of those exceptions was the case of high dollar claims. Now high dollar claims was never defined, and so there was some uncertainty about when a claim would be sufficiently large to be exempt from prohibition. We spoke with insurers, and I believe one of them was already using the threshold of $25,000, but they found that to be an adequate threshold. So all we're doing in section six is replacing high dollar with claims exceeding $25,000 per episode of care. Now this is not a requirement that any claims above that level need to be subject to prepayment validation. It is an option for the insurer that they have the the ability to do that. It also doesn't limit them to a $25,000 minimum. The existing statute does have other exemptions for fraud, waste, or abuse or other circumstances. It just provides more clarity around when a claim can be subject to the prepayment validation review.

[Sen. Ann Cummings (Chair)]: Okay, and this is going back to Bill that did away in many cases with prior auth? Yes. Yes, and did away with or changed the editing. Mhmm. Then we had one insurer say, if I have to change my whole editing system, you're such a small part. I'd be out of here. So we the next year, I believe, adjusted the editing you adjusted. We adjusted prior authorization. You adjusted prior auth. Okay. So this is going back and in that bill. And some of us tried to amend that bill in a bipartisan manner and failed. I was looking for an actuarial assessment before we did it. But we so this construed to prohibit target prepayment coding. Can you tell us what that means in English?

[Joe Valenti (Director of Policy, DFR)]: So there is a definition in Act one eleven that I brought with me.

[Sen. Ruth Hardy (Member)]: It's on in paragraph e one.

[Nolan Langweil (Joint Fiscal Office)]: Yes. So

[Joe Valenti (Director of Policy, DFR)]: this is prepayment coding validation edit review. That's a mouthful. Means any action by the health plan, contracting entity, covered entity or payer, or by a contractor, SNA agent, etcetera, requiring a healthcare provider to provide medical record documentation in conjunction with or after submission of a claim for payment for health services delivered, but before the claim has been adjudicated. So, they haven't My understanding here is they have received a claim, they have not paid it yet, hence prepayment claims that and they are looking for additional medical record documentation to be able to evaluate that claim.

[Sen. Ann Cummings (Chair)]: Okay, so they wanna know that it was medically sound and that it was actually delivered. Alright, And then I assume all those costs would also be covered by all the work that's being done on hospital charges. Doesn't move you down the hall.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Here's a question. Okay. And that is in terms

[Nolan Langweil (Joint Fiscal Office)]: of the review of

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: the kinds of claims referred to here, is there anything regarding the time that such might take, or is there any limitation by saying a reasonable period of time or otherwise? I couldn't find anything that defined what this additional review might consist of.

[Joe Valenti (Director of Policy, DFR)]: That would depend on what's in Act one eleven. I'm not positive that there is a So

[Sen. Ann Cummings (Chair)]: there are a lot of timelines dependent upon individual situation. And most of those timelines are built to not impact the consumer. So sometimes, for example, a claim will get denied by the insurer that the provider of the not to be insured. So, everything is geared so that nobody is at the insured for that payment until the insurer and the provider have sorted out what's the right payment. Timelines depend on, for example, there are short timelines for prior authorization. There are certain timelines for how long a claim needs to get adjudicated, for when a provider can object to an adjudication. All of those are in statute and there's a variety of timelines depending

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Another those point we're really looking for is from a consumer standpoint. Can a consumer get caught in the middle of this between the dispute between the regulator and Blue Cross as to whether or not something should be paid, and then what's the recourse from the consumer's perspective?

[Sen. Ann Cummings (Chair)]: So the consumer shouldn't get caught because anything for example, oftentimes the insurer will reject an extra billing code on-site. That rejection goes to the provider, not to the insurer. So the insured, as far as they know, their bill has been paid, and there's a fight going on in the background between the insurer, the insurer, and the provider, but it is not getting billed to the consumer at that point. It doesn't affect them. Okay. Other questions?

[Joe Valenti (Director of Policy, DFR)]: Sections seven and eight are dealing with site neutral billing, and this is narrowed down significantly from what was initially proposed in H five eighty five. Cytome neutral billing is a concept that has, it's an emerging practice. Medicare has been working on this for various services over the past decade or so. The idea is that if you have a given service that can be delivered inside a hospital or outside of a hospital, there shouldn't be a price differential based on where it's delivered. If you think of something like, we're not dealing with doctor visits here, I'm just using this as an example, but if you were just conducting an office visit with a physician, no special equipment involved, and you are having that office visit at a hospital or in the community, there shouldn't be two separate rates for that. There's no reason for that service to take place in a hospital at a higher rate. And in Vermont, there are a lot of services delivered in hospitals compared to other parts of the country, but it is all it is frequently seen, particularly in other places, that things like, again, doctor visits, lab work, x rays, MRIs, don't necessarily need to take place in hospitals. When they do take place in hospitals, they may be taking place at a higher rate. And so we had started this process with a bolder proposal to look at signature billing for, a list of services to be determined by DFR and the Rebounded Care Board. That was going to be complicated. It could be potentially risky to hospitals because of the volume of services that could be implicated there. And so House Healthcare decided to take a narrower approach to pick one service where the the cost differentials were known and where we could sort of try this out. And this was the area of physical therapy, occupational therapy, and athletic training. And I believe the testimony for that had identified what the specific codes would be. Part of the expansion from PT to include the other two categories just dealt with the sort of interchangeability of the services, and that it would be easier to ask a wider net and make sure that you weren't inadvertently favoring one over the other. So if you, to give an example here, if you had a physical therapy service and the rate that the insurer would pay inside a hospital were $300 and outside of a hospital were $100 this bill would say that instead, if it is truly an outpatient service, it doesn't require the higher levels of care of an inpatient service, that each insurer would set one rate for that given physical therapy service that could be, you know, it's probably not going to be 100 or 300. It's probably going to be somewhere in the middle. It could be 150, 200, two fifty. That would be a negotiation, but that rate would apply to all outpatient physical therapy services using that code in the entire state.

[Sen. Ann Cummings (Chair)]: I just have a question. Because I got a constituent who got caught in this getting physical therapy, went through her insurance, had had a stroke, was really improving, figured I could do it at $90 a session for x sessions. A couple months later she gets a $30,000 bill from the hospital. The hospital had taken over the physical therapy office. Around here that's more common than not. As I understand it, the note that was taped to my provider's desk, there's a fee and then there's a $200 it may have gone up now, facilities fee because you have the benefit of all the knowledge in the teaching hospital. Is what the insurance company is going to pay inclusive of that $200 fee or exclusive? Are they gonna all get $100 plus the one that is part of the hospital is going to get, in the end, 300.

[Joe Valenti (Director of Policy, DFR)]: So, my understanding, and I will defer to Mary or Guy if I'm missing something here, we are not tackling the practice of facility fees here at all. I know that there have been bills introduced to deal with facility fees as a separate component,

[Nolan Langweil (Joint Fiscal Office)]: but as we see, this

[Joe Valenti (Director of Policy, DFR)]: is the This is fee. Right. This is the rate for the service, the service that is delivered and standardizing that across all settings.

[Sen. Ann Cummings (Chair)]: Think one of our physical therapists, we had them in health and welfare last week, the week before. They are having a very difficult time as private practices surviving. So it's mostly the reimbursed. Is

[Sen. Ruth Hardy (Member)]: it there's nothing in here that says that the fees should be the lower of the two fees. They they could all they could just reimburse them all, the 300 instead of all the 100 in your example, and that would just raise health care costs across the board. So, it seems to me that we would want to include something that, you know, the goal of this is to save patients money.

[Joe Valenti (Director of Policy, DFR)]: So, expect that it's going to be a negotiation. We expect that it will fall somewhere in the middle, you know, per various conversations. Ideally, this is a way to cut costs. It may in the short run, it may just be sort of neutral, but it's spreading that around between the hospitals and the independent providers who, as you noted, are struggling with the rates that they have. There's a certain competition angle here that if the rates are brought up from the 100, it may be easier for the independent providers and also to encourage new market entrants for this or any other service that could increase competition. I think with regard to so I don't expect it to naturally gravitate to the highest level. The initial proposal that we had involved identifying services and the Green Mountain Care Board setting rates for those services. And I think from talking to house health care, there were issues about resource constraints. I think there were also concerns that, it could be too, heavy handed of approach. And I know that there's a debate going on around reference based pricing and exactly where you set those targets. So rather than having a government body set what those levels are, we decided to subject it to the normal negotiation process for insurers just that whatever rate they set in Vermont for a given outpatient PT service, that rate would be uniform no matter where it was located. Across the state?

[Sen. Ann Cummings (Chair)]: Yes. Okay.

[Joe Valenti (Director of Policy, DFR)]: Now one of the things that we had considered, but did not include, when we were working on the original version, was whether there might need to be, some type of a carve out as there was in Act 55, if there were scenarios where critical access hospitals would not be able would not be able to meet that change. If you if you think of a world where you have hospital providers and independent providers and it's fairly competitive, Site neutral encourages that competition. Mhmm. That can work pretty well. It is true if you are looking at a service where it simply is not happening outside of a hospital, right, it's less competitive, then someone could look at site neutral as really as being a, you know, just a cut up in the level of payments that are made. Okay.

[Sen. Ann Cummings (Chair)]: I think I know why health and welfare wants to look at this, ma'am. Okay.

[Joe Valenti (Director of Policy, DFR)]: Anything else on-site neutral? I will pass it back to Deputy Commissioner Block for the last handful of sections.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Okay.

[Sen. Ann Cummings (Chair)]: Okay, it's like musical. It is. We're keeping you alive.

[Joe Valenti (Director of Policy, DFR)]: Getting our steps up.

[Sen. Ann Cummings (Chair)]: Alright, so the last two sections were not in the original version of our Bill five eighty five. These were both added by House of Health Care at Chair Black. This is the third bill. Yes. This is Chair Black's additions to H585. So I would start with the out of pocket max. She originally added language to eliminate the prescription drug out of pocket max mandate that's currently in state statute. After much discussion and questions about the impact of that, the language became the study that Nolan talked about, that Veeva will do as a part of their actuarial work looking at the plan and that we will assist them So, we'll take a look at what potentially the impact of removing the prescription drug out of pocket max is. I believe we'll probably look at some scenarios of, you know, do we have some plans that have no out of pocket max? Do we have some plans that do? Do we change the total out of pocket maximum versus the prescription drug and so forth and see what those variations might be? But that study will inform whether next year it makes sense to take out the prescription drug out of pocket max and see what we go from there. Finally is the reporting on healthcare sharing plans. This was actually H102 originally. Yeah. Yeah. Which I think was introduced last session, but there was a prior version Prior that was version did not come out here for a reason. Sherablan wanted it inserted, she has added it to the bill. It is a reporting requirement only. DFR would receive the information, we would digest it, we would create a report, and we would post it to our website. It would provide information to us about sort of what the alternative healthcare reimbursement mechanisms are operating in the state, it will provide information to reminders about what those alternatives are as well. But other than that, we would be no regulation. We would barely take information, digest it, put it back out. The reason it didn't come out of here was the fact that they we've already said in law, they are not health insurance. They are not. Your health insurance people can't sell them. They can't call them health insurance, they are not health insurance. There was a concern that if they had to report everything to the Department of Financial Regulation, they could see say, we are overseen by or we report to the department, which would give them maybe the public's eye for legitimacy than some people were comfortable giving them. So that's but I can also see it would be helpful to know because we have had at least one large of these groups go under, and there were people that were hurt. There probably have been more. There have been more in other states. Yeah. Not here. No. We did have one where we issued an order, a cease to desist order, because they were crossing the line, and it appeared that they were selling insurance because based on the marketing materials. And we do get periodic inquiries from consumers asking about, you know, what is this? You know, I thought this was gonna cover this or that, so forth, and so we can have those conversations. But there are others that are operating and have been operating for a long time that we hear nothing about. They're So They're just just an an Religiously affiliated. I would say the majority of them are. There are some that have developed that are not necessarily religious at this point. They have similar limits with requirements. There are some tenants of the organization that members are required to follow, but they are not necessarily all religious at this point. There is a, this is based on Colorado law that was passed in Colorado and is operational. It has been challenged constitutionally, so they have been sued. It has not been It was just making its way through the courts. The health care sharing ministry has lost on a preliminary injunction that they would tend to be dead, but it is still making its way through the courts. So Okay. We can I know their representatives are here? They left when we needed space, but they were very clear me today. We wouldn't be taking testimony. I might very well have two thirty seven out of here, hopefully, in a few minutes. Hopefully.

[Nolan Langweil (Joint Fiscal Office)]: Yeah.

[Sen. Ann Cummings (Chair)]: I guess how the world has already eaten us with the first pill out of chain. No. We got beat by judiciary. We got beat by judiciary. Well, maybe we can come in this number of degrees. Alright. Any other questions for me? I think that's the end of this. Okay. Yes. And again, we may not wanna do this, as we have in the past, if there is an active lawsuit. Lawsuits are expensive. Yep. So we'll let Colorado pay for it. And Certainly you're Yep. Okay. Because there is no mandate that anyone has health insurance. You can choose not to choose or you can choose. The question is how are they presenting themselves? Right. Do people understand the risk? Yeah. So They present themselves as insurance Yeah. Then they fall under our jurisdiction. Yeah. We would use take action. Right. Once they present themselves appropriately, then they go home and have a first issue. Okay. Thank you. Thank you. No. Thank you. We've been through our visual walk.

[Kai Simpson (Commissioner, Dept. of Financial Regulation)]: Time when these problems happen again.

[Sen. Ann Cummings (Chair)]: Would you like to take about a ten minute break and then come back? I think we could get two thirty seven out of here.